OK – I need a valuation…now what?

OK – I need a valuation…now what?

November 25, 2011

So, you have decided that you need a business valuation but don’t know what to do next. If you are like most people, you want to get an idea of the potential costs involved. Usually we like to get a bit of information about your company before we can give you a fee quote – things you can expect to be asked include ‘what type of business is it and how large’ and ‘what is the purpose of the valuation’. In order for us to provide a reasonably accurate estimate of our fees, we also like to take a quick look at your most recent financial statements.

The process is actually quite straightforward. We send you an engagement letter for your signature; the letter basically sets out the terms of the engagement, the services to be provided and each party’s obligations. We then send out a comprehensive list of information that we would like you to accumulate for our review. Although the list can often seem daunting at first, certain items may only require a quick ‘yes’ or ‘no’ answer. In addition, it can be helpful for us to have access to the controller or CFO to answer some of the specific financial questions that we may have. Once we have had a chance to review the information, we will set up a meeting to go through the operations of the business and review any questions that may have arisen during our review. After our meeting (and usually some follow-up discussions) we will prepare and send to you our valuation report in draft. If you are comfortable with the facts and assumptions that we have relied upon and don’t have any further questions we can then finalize our report.

The next question is usually ‘how long will this take’. The answer often depends on how long it takes for us to receive the information from our initial request. While we aim to provide you a draft report within two to three weeks of having received all of the requested information, in our experience, most valuations take in the range of 4 to 6 weeks…but we’ve been known to turn around a valuation in less time if you are in a rush (and can get us access to the information we need).